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> 2021: Dropped, broken screen (365$ repair down to $0 under AppleCare) iPhone screen repairs cost almost $400??
In contrast, the insured often relies on a recollection of their history and a ton of emotional reasoning to decide if they will be the statistical oddity to make "a profit" of having bought insurance. This isn't generally the point of insurance. The point of insurance is to amortise risk. Yes, the insurance company expects to, on average, get more money from insuring my house than the cost of any damage to it. But i…
> What apple charges for repairs almost definitely has markup, so it's possible that they can provide insurance that averages out below the expected "cost" of repairs but still makes apple money. For them to make money from offering the insurance, it would have to be a gain over their alternative of you not having the insurance and then paying them to repair the device if it breaks. They also have to be making enough…
Mac repairs aren’t anymore, but non-Applecared people might switch off the Apple platform if the cost to repair is too high.
It’s possible that AppleCare is a win for both Apple (customer retention) and the customer (lower cost to stay within favorite ecosystem) because it is NOT a zero sum game between them - there are many other players in the game.
My last phone was replaced once and my current one has been replaced twice, both under AppleCare. I view AC as “phone as a service”, which is reasonable. The recent option to add accidental drop and theft coverage onto the base AppleCare seems to be making that explicit. I’d like to always have a phone and have it be replaced quickly if it goes kaput.
They really should have done this with their Services Strategy, not trying to push Apple Music, TV, App Store etc.
In contrast, the insured often relies on a recollection of their history and a ton of emotional reasoning to decide if they will be the statistical oddity to make "a profit" of having bought insurance. This isn't generally the point of insurance. The point of insurance is to amortise risk. Yes, the insurance company expects to, on average, get more money from insuring my house than the cost of any damage to it. But i…
Companies certainly offer 'extended' or longer warranties compared to a competitor as a selling point with the intention to deny all claims and issues. Asus is particularly bad about this.
An independent repair shop would have been able to perform those repairs for ~1/5th the price. This is what I've experienced when comparison shopping repairs.
In contrast, the insured often relies on a recollection of their history and a ton of emotional reasoning to decide if they will be the statistical oddity to make "a profit" of having bought insurance. This isn't generally the point of insurance. The point of insurance is to amortise risk. Yes, the insurance company expects to, on average, get more money from insuring my house than the cost of any damage to it. But i…
I remember a course on game theory at business school where we proved all insurance to be non-optimal. There were two ways to deal with catastrophic risk if I recall correctly, depending on the gain function: a) if catastrophic risk is infinite - no premium will be acceptable due to price. b) if catastrophic risk is discrete - it is optimal not to insure since the expected loss is ruinous anyways. Led me to be highly…
An insurance company makes money because they don't expect many of these cases to happen at once. But that's not a position you should take.
Earlier quoted context omitted.
What tech products are robustly designed? The market incentives are towards disposability. Send it to the landfill and buy a new one, the new model is better anyway.
There's a cult around thinkpads, but even those have gone to the wayside in recent years.
In contrast, the insured often relies on a recollection of their history and a ton of emotional reasoning to decide if they will be the statistical oddity to make "a profit" of having bought insurance. This isn't generally the point of insurance. The point of insurance is to amortise risk. Yes, the insurance company expects to, on average, get more money from insuring my house than the cost of any damage to it. But i…
If you only take Apple's word for it. Their lawyer said in court they do not make any profits for their repairs. And may be running at a lost. Apple then also did a few PR pieces on how they lost tens of millions every year due to repair fraud.
I wouldn't say it is a flat out lie, but it is definitely a spin if you know anything about BOM and operation cost.
The AppleCare Services itself of course make additional profits, it is often the money making item for 3rd party resellers. Selling AC makes more profits for them than iPhone or Mac. If Apple can pass those on to retailers, you can guarantee Apple is making lots of profits on it.
As a matter of facts this is all just Insurance and Data Science. You can buy similar protection from other insurance companies, and you should immediately notice the price difference.
I remember a course on game theory at business school where we proved all insurance to be non-optimal. There were two ways to deal with catastrophic risk if I recall correctly, depending on the gain function: a) if catastrophic risk is infinite - no premium will be acceptable due to price. b) if catastrophic risk is discrete - it is optimal not to insure since the expected loss is ruinous anyways. Led me to be highly…
I'm not sure if this still holds if you account for inflation. They really screwed the pooch on that one, so it wouldn't surprise me if it did.